Report finds 14 per cent of tobacco sales “illegal”

Retail industry bodies and the tobacco industry are calling for greater enforcement, following a report that illegal tobacco represented more than 14 per cent of the total market in 2018.

The report, prepared by KPMG in the UK, estimates that 2.1 million kg of tobacco was purchased illegally last year, costing the Australian economy up to $2 billion.

While the total consumption of illicit tobacco declined by 11.1 per cent between 2017 and 2018, according to the report, two recent illicit tobacco seizures highlight that this is an ongoing issue.

In May, the Australian Border Force revealed that eight people had been detained and deported for bringing in 177,063 undeclared cigarettes at Melbourne airport. That same month, police in Sydney dismantled an organised crime syndicate that allegedly imported more than $9 million worth of illicit tobacco.

The federal government has introduced new rules to combat illicit tobacco, which are set to kick in on July 1. They will require importers of tobacco and tobacco products to have a permit – with some exceptions – and will change the point at which importers are required to pay custom duty.

But Ben Kearney, CEO of the Australian Lottery and Newsagents Association, believes they don’t go far enough.

“Federal efforts to curb this significant illicit trade have been welcome, but much more needs to be done by all enforcement agencies both state and federal to stop this illegal trade at a retail level and to protect legitimate retailers from the risks that come with this trade,” he told Inside Retail.

“It unfairly impacts many of our retailers’ businesses and their staff who work incredibly hard to do the right thing when selling this highly regulated product and it completely undermines those strict regulations.”

Kearney said that newsagents and consumers are becoming frustrated that policies like regular tobacco excise increases are no longer working.”

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